Stamp Duty on Commercial Property

You may be familiar with Stamp Duty Land Tax (SDLT) being the sting in the tail of any residential property transaction that exceeds certain thresholds, but did you know that SDLT may also be payable by the buyer in commercial property transactions.

Commercial stamp duty rates:

Purchase priceSDLT rate
Up to £150,000Zero
The next £100,000 (the portion from £150,001 to £250,000)2%
The remaining amount (the portion above £250,000)5%

These rates must be paid in relation to a purchase of non-residential property including:

  • commercial property, eg shops or offices
  • agricultural land
  • forests
  • any other land or property that is not part of a dwelling’s garden or grounds
  • 6 or more residential properties bought in a single transaction

The rates are also applicable where the property purchased is ‘mixed use’ i.e containing both residential and non-residential elements (for example where a flat is connected to a shop).

Stamp Duty on Leasehold Properties

When the non-residential or mixed use property is new and you are acquiring a leasehold interest rather than freehold, SDLT must be paid on both the:

  • purchase price of the lease (the ‘lease premium’) using the rates for freehold above; and
  • value of the annual rent you pay (the ‘net present value’)
  • These are calculated separately then added together.

If you buy an  existing (“assigned”) lease, you will only pay SDLT on the lease price (the “Consideration”).

Net present value of rentSDLT rate
£0 to £150,000Zero
The portion from £150,001 to £5,000,0001%
The portion above £5,000,0002%

Am I Eligible for any SDLT Reliefs?

Some commercial property transactions may qualify for relief, which can reduce the amount of stamp duty land tax you pay.

Examples include:

  • Group Relief

Companies can claim relief if, at the effective date of the transaction, the seller company and the buyer company are both members of the same group.

  • Charities Relief

Charities can get relief from SDLT when they buy land and property for charitable purposes. There may also be partial relief if the purchase is made jointly with a non-charitable entity. HMRC can withdraw the relief if the property reverts to non-charitable use or the charity’s charitable status ceases within 3 years of the transaction.

This list is not exhaustive and other reliefs may be available.